Vlad Trusca, Ministry of Environment and Water Management, Romania, noted that his country was the first Annex I party to ratify the Kyoto Protocol and presented its latest greenhouse gas inventory. He listed priority areas for Joint Implementation (JI) projects, including: energy efficiency measures; rehabilitation of district heating systems; co-generation installations; fuel switching; and reforestation. He outlined future activities, namely: adopting a national strategy and plan for climate change; improving institutional capacity for managing JI projects; and cooperating with Japan, Canada, and Italy.

Noting that many JI projects have already been approved in Bulgaria and Romania, Charlotte Streck, Climate Focus, stressed the urgency of adopting international guidelines for such projects. She said the complementarity of the various emissions trading schemes is unclear for some ministries and underscored the need for capacity building. She noted the interest in first-track JI projects, but underlined that most countries do not meet eligibility criteria.

Daniela Stoytcheva, Environmental Strategy and Programs Department, Bulgaria, noted the potential of Central European countries to reduce emissions, but queried the extent to which the EU Emissions Trading Scheme (ETS) will leave room for effective JI projects. She stated there is a lack of clarity about the interaction and complementarity of the different trading schemes and called for capacity building to enable Central European governments to effectively participate in these mechanisms. She added that the Green Investment Scheme (GIS) is an opportunity to help raise awareness on climate change.

Daniela Stoytcheva, Environmental Strategy and Programs Department, Bulgaria, stated that her country has chosen to be poor but to save the planet

Jürgen Salay, European Commission, presented on the EU ETS and the Kyoto Protocol mechanisms and indicated that the EC and its members can participate in the Kyoto mechanisms to achieve their reduction targets. He also specified that European companies may use JI or CDM credits for compliance with the EU ETS. Noting that thousands of companies are covered by the trading scheme, he said it has given them a strong incentive to use credits from JI and CDM. He said the GIS will provide a way for buyers to show they are supporting sustainable development in host countries.

Discussion: Panelists discussed, inter alia, baselines for JI projects under the EU ETS, and capacity building in Bulgaria and Romania.

Exploration of possible approaches in the UNFCCC post-2012 negotiation process

Presented by the Center for International Climate and Environmental Research

Kornelis Blok, Ecofys, outlined a joint study on future options by the Center for International Climate and Environmental Research (CICERO) and Ecofys, sponsored by the European Commission, and listed five elements of a post-2012 regime: a three-stage agreement on emissions reductions; agreement on land-use change and deforestation; agreement on adaptation; agreement on technology; and inclusion of the Kyoto flexibility mechanisms.

In discussing the five elements, Niklas Höhne, Ecofys, proposed a multi-stage approach to reducing emissions based on three country groups and an emissions cut-off level between five and nine tons of carbon dioxide equivalent per capita. He examined whether it would be preferable to have a separate agreement on land-use change and forestry (LUCF) or an integrated agreement. Considering agreement on adaptation, he proposed a low but increasing carbon levy to finance adaptation. Höhne highlighted the need to promote technology change, mentioning that a possible technology agreement could be either input or output oriented, and listed: energy efficiency in buildings, cars, and manufacturing; as well as renewable energy; clean fossil fuels; nuclear energy; and agriculture as key areas for technology cooperation. Höhne stated that the 450 ppm concentration target would be achievable with these steps, but noted that Annex I countries must commit to 30% emissions reductions. He discussed different options for engaging the US and outlined a “fall-back” treaty option.

Asbjørn Torvanger, CICERO, discussed options for the post-2012 negotiation process, including an early or delayed agreement. He indicated preference for an integrated agreement which would, inter alia, enhance flexibility and transparency, and enable different commitment profiles. He identified the UNFCCC as the best negotiation framework, and proposed: a “coalition of willing” countries; dialogue and informal processes; the involvement of non-State actors; and linking with other issues, such as development and energy security. He highlighted the need for: European leadership; the achievement of current targets; willingness to take further action; and positive signals on collaboration and partnerships.

Joshua Wairoto, Kenya Meteorological Department, underscored the importance of the equity principle in a post-2012 climate regime. He identified the need to: make larger emissions reductions; bring the US onboard; and address developing countries’ adaptation concerns by, inter alia, ensuring the functioning of the Least Developed Country and the Special Climate Change Funds.

Discussion: Participants discussed: research on emissions reductions needed for a 380 ppm concentration level; energy security and dependency on fossil fuels; the link between trade, climate, the Kyoto Protocol, and the World Trade Organization; the role of the LUCF sector in reaching the 450 ppm target; and African views on a desirable per capita emission level.

Lars Müller, European Commission, gave an overview of the European Community’s (EC) inventory system for implementing the UNFCCC and the Kyoto Protocol. He indicated that the reporting obligations under the Marrakesh Accords are now part of the EC’s legal framework and that a climate change committee has been established to: analyze and improve member States’ and the EC’s greenhouse gas (GHG) emissions inventories; exchange national experiences; and evaluate the EC inventory system. He noted difficulties due to the different methodologies employed by EC members for reporting to the UNFCCC.

Pankaj Bhatia, World Resources Institute, presented the work of the GHG Protocol, a policy neutral forum, which aims to develop international GHG accounting and reporting standards for businesses through an inclusive, transparent and multilateral stakeholder process to ensure harmonization, and to improve comparability and credibility of information. He said parts of the GHG Protocol’s information have been incorporated into, inter alia, GHG registries, reporting initiatives and trading schemes, leading to some harmonization. He highlighted that future challenges include using: a consistent approach to consolidation of emissions-setting organizational boundaries; common definitions and terminologies; GHG data in corporate balance sheets; and GHG calculation tools.

Jochen Harnisch, Ecofys, said the EU’s monitoring and reporting guidelines (MRG) under its ETS are built on three pillars: monitoring; reporting; and the verification of emissions reports. He stated that the MRG aim to ensure: consistency of national inventories with the UNFCCC; market and stakeholder confidence; transparency of GHG monitoring and reporting; a level playing field across the EU; installation accuracy; and cost-effectiveness. He highlighted that the MRG do not harmonize requirements for verifiers’ verification and accreditation. He stated that future aims are to: achieve full consistency of national reporting for the second commitment period; maintain basic consistency with other GHG reporting and verification schemes; review and amend activity-specific annexes; improve the cost-efficiency and flexibility of the MRG; maintain accuracy; and incorporate other gases.

Edwin Aalders, International Emissions Trading Association, considered possibilities for “common currency and verification” under the EU ETS and other emissions trading programmes. He highlighted problems within the EU ETS, such as: individual verification and auditor requirements; lack of clarity of the verification statement requirements; and general stakeholder uncertainty regarding obligations. He suggested that benchmarking emissions trading programmes could improve linkages and access between emissions trading schemes.

Discussion: Participants raised issues related to: double counting for direct and indirect emissions; harmonization of software tools for inventory development and accounting; the possibility of verifying the EU’s 12,000 installations; continuous measurement of the MRG; and verifiers’ accreditation.

Pankaj Bhatia, World Resources Institute, said national and regional climate initiatives, such as the Mexico GHG Program and the French REGES Initiative, have been informed by the GHG Protocol

Artur Runge-Metzger, European Commission, said the EC will consider expanding the EU ETS in terms of sectors, gases, and linkages to other emissions trading schemes when it reviews the EU ETS directive in 2006. He said the EU ETS will continue beyond 2012 but that national emissions allocation plans beyond that date will depend partly on international negotiations, highlighting the interdependence between the EU’s climate policy and international processes.

Matt Jones, Environment Canada, discussed the two aspects of Project Green, Canada’s new climate change plan, which are most relevant to the international carbon market: the Large Final Emitter System (LFES) and the Climate Fund. He said the LFES provides a series of compliance options for companies to reduce emissions and covers companies representing 50% of Canada’s GHG emissions. The Climate Fund, with an initial investment of CAN$ one billion, aims to purchase emissions and removal credits at the domestic and international levels. He explained that the Climate Fund’s involvement in the international carbon market will evolve over time.

Nick Campbell, Union des Industries de la Communauté Européenne (UNICE), provided a private sector perspective on the EU ETS and its future beyond 2012. He said issues for business include: comparative allowance amounts between member countries for certain sectors; the varying release dates of national allocation plans; harmonization, within industries and between member States, of definitions used in reporting; the continuation and possible expansion of the EU ETS beyond 2012; and the ongoing applicability of CDM and JI credits in the EU ETS.

Murray Ward, Global Climate Change Consultancy, outlined a project to review the key proposals for a post-2012 regime in terms of their relation to the international carbon market. He said the project report, to be launched at a COP 11 side event, will assess, inter alia: system architecture, utility and efficacy; market mechanics; fungibility; transaction costs; system negotiability and resilience; and developing country engagement.

Toshiyuki Sakamoto, Ministry of Economy, Trade and Industry, Japan, explained that whilst Japan has decided not to introduce a cap and trade system, it may consider this option in the future. He said ongoing issues relating to a cap and trade system include the administrative costs of such a scheme and the government’s general policy of deregulation. He suggested that in planning for the future of the international carbon market, the principles of supplementarity contained in the Kyoto Protocol and Marrakesh Accords should be considered.